The Impact of Increased Cost-sharing on Utilization of Low Value Services: Evidence from the State of Oregon

NBER Working Paper
No. 22875
December 2016
Gruber, J., Maclean, J.C., Wright, B.J., Wilkinson, E.S., and Volpp, K.

In this HCFO-funded study, the researchers examined the impact of a value-based insurance design (V-BID) program implemented between 2010 and 2013 at a large public employer in the state of Oregon. The program substantially increased cost-sharing, specifically copayments and coinsurance, for several healthcare services believed to be of low value and overused (sleep studies, endoscopies, advanced imaging, and surgeries). Using a differences-in-differences design coupled with granular, administrative health insurance claims data, the researchers estimated the change in low value healthcare service utilization among beneficiaries before and after program implementation relative to a comparison group of beneficiaries who were not exposed to the V-BID. The findings suggest that the V-BID significantly reduced utilization of targeted services. These findings have important implications for both public and private healthcare policies as V-BID principles are rapidly proliferating in healthcare markets.

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